Some fixes for cable TV’s poor reputation
February 3rd, 2010, 2:41 pm · 26 Comments · posted by Tamara Chuang, a.k.a. The Gadgetress
Cable TV companies are losing customers daily.
But if you take a close look at Time Warner Cable’s and Comcast Corp.’s recent financial update, both companies are losing customers they don’t really want anymore. That’s basic cable customers. Instead, both are gaining digital TV customers, who are likely to pay more per month and use less bandwidth.
So, while 68 percent of cable TV users say they’ll drop their service for a 20 percent discount elsewhere (read: Cable TV users just want a 20% discount, says report), are customers are really willing to run?
Readers give several reasons why they’re unhappy with their cable or other paid TV service but won’t drop it (read: “Why do unhappy customers stay with cable TV?“). Some legitimate reasons include the physical inability to subscribe to an alternative, higher cost if you have multiple TVs, or they’re locked into a long term contract. (I’ve added the poll at the bottom of this post.)
Ben Piper, an analyst with Strategy Analytics who published yesterday’s report about unhappy cable users, answered a few more questions about the state of cable:
Gadgetress: Readers are constantly berating cable TV. Much more positive responses for IPTV and satellite TV services.
Ben Piper: Our research certainly supports that observation. Overall, customers in our survey reported high satisfaction with their current digital television provider. Seventy-one percent of respondents reported to be “somewhat” or “very” satisfied with their current service.
While this may seem like positive news for the digital television industry, the story changes somewhat when viewed at the individual platform level. The differences among Cable, Satellite, and Telco TV subscribers was marked, with Telco/IPTV customers reporting 95% overall satisfaction, compared to 67% for Cable.
When viewed at a more granular level, Cable underperformed in virtually every metric. The disparity was most pronounced in the areas of ‘Choice of Channels,’ ‘Quality of Channels,’ ‘Picture Quality’ and ‘Innovativeness.’
Q: Internet TV services (Verizon FiOS and AT&T U-verse) are the newest but least available. Is it just a matter of time before even these services develop a horrible customer service reputation?
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What keeps you from switching to a new TV provider? (Feel free to add your own answer)
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Piper: The entry of the Telcos into the TV arena has been a game changer. Up until four or five years ago, Cable companies enjoyed decades with virtually no competition (a “cozy duopoly” with Satellite, some have said), and so had very little incentive to “delight customers at every turn.” With Verizon and AT&T shaking things up, this is bound to change.
Q: Any indication that consumers will pay more for better customer service?
Piper: In last year’s survey, customer service was among the lowest rated metrics, and we pointed it out as an area where cable could improve. To be fair, I think certain cable companies have taken demonstrable steps to improve customer service, some offering service credits for missed or late appointments, and shortening the dreaded “sometime between 7 and 2″ appointment window to a two-hour window.
We’ve also looked at what types of factors keep customers from switching. It’s interesting that the perceived “pain in the neck” (or whatever other part of the body) factor is sufficient to keep some from ever getting rid of their existing service. Customers dread having to make the call, schedule new installation, return the set top box, etc. We view this as a huge opportunity for competitive service providers to swoop in. Those that can eliminate (or at least mitigate) the inconvenience and make the transition as “seamless” as possible will be winners.
Q: What TV service is actually the cheapest?
Piper: It’s tough to say on a national level, as cable is priced competitively by market. In addition, service providers make it difficult to compare “apples to apples (Back on the soapbox for a minute) Customers in our survey reported-across the board, and irrespective of platform-a very low “value for money” perception. This is a cautionary signal for pay tv. With the expanded availability of so-called “Over the Top” (OTT) content options such as Hulu and Netflix, we anticipate a certain amount of “cord cutting.” In fact, some research we did back in July suggested that consumers were much more inclined to scale back or drop their pay television than their broadband pipe to the home.
Q: TV services are constantly negotiating for TV channels, which demand more money and ultimately means a higher bill. Can TV services avoid rate hikes? Does it really cost that much to offer TV?
Piper: The pay tv business model is complex, so it’s difficult to give an easy answer. That said, I think that the market might force a shake up of the existing model, particularly with regards to “content tiers.”
The very nature of cable advertising is in flux, brought upon largely by digital television. The 30-year old model in place today, whereby flagship channels lead certain tiers and support fledgling new ones, could be facing some changes. While the NCTA (National Cable Television Association) estimates that half of cable companies’ revenues come from national ad sales, this is certainly shifting. Intelligent two-way networks will herald in addressable advertising-the next step in demographic targeting.
Q: Since cable companies continue to add the more valuable digital customers, are they not concerned with losing basic video customers? And where are those basic customers going?
Piper: Comcast, who reported today, saw a loss of 623,000 video customers in 2009, though video revenues were still up 1.1%. 78% of Comcast’s customers are currently digital cable, and they plan to continue their “All Digital” strategy through 2010.
The push has been on for some time to migrate cable customers from analog to digital. On a national level, just over two-thirds of cable customers in the US are digital, and the effort is certainly there to continue to move in that direction. Digital cable is a superior product– there is no question about that.
The issue has been a lack of coherent and convincing marketing to make customers want to switch. I’m always amazed at what advertisers seem to take for granted—the assumption seems to be that the average customer understands what VOD is, or what the relative benefits of HD over Standard Def are. I think too often they over-estimate the level of customer sophistication.
As to where those customers go…it is something we try to pick up in our semi-annual surveys. It’s a tricky metric to track (compared to say, wireless), given the fragmented patchwork of cable across the country. Comcast may operate in one county, but not the adjacent one, etc. Generally, though, we don’t think customers are dropping cable completely-they are either upgrading to Digital, or switching to Telco TV (if available) or Satellite.
Related TV news:
- Cox raising cable TV, HD and Internet prices in Orange County
- How much money did Time Warner make last year? $1.1 billion
- DirecTV prices going up in 2010 too
- AT&T U-verse raising TV, phone, Internet prices in 2010
- Minimum Time Warner Cable bill: $8.50/month
- Psssst: Digital cable TV is cheaper than analog cable
- Time Warner 2010 price hikes mostly affect those who order the least
- Cable TV bills will go up if Fox, CBS get their way
- Is Time Warner really cheaper than Verizon FiOS?
- Cable TV bills quadrupled in 10 years, but look what you now get
- Time Warner Cable offers cheapest deal in Spanish — not English
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Love my HD stations via my antenna . . . it’s free, and the content looks and sounds great.
I wish they’d let us choose our cable line-up “a la carte”, where we could include the channels that we really watch, and not have to pay for the ones we never watch.
I don’t know why I should be forced to pay for two different “home shopping club” type networks when I never watch them, and even though I like to watch baseball and football sometimes, I don’t really feel like paying for more than one sports station. Don’t even get me started about the spanish, korean, chinese and persian language channels.
It often feels like the canned channel line up is basically forcing the consumer to subsidize channels that would otherwise have too few viewers to support them.
You’re not alone! You and a few others are starting to realize that Big Cable force feeds us programming. While every other business in America is cutting back, Big Cable pushes more and more channels on us, then jacks up the costs. Arg!
There is a consumer movement to bring back competition and transparency into the industry. In San Francisco, we are getting close to getting to critical mass for a small cable operator providing us an “a la carte” service. No reason why other cities should be stuck with the same old status quo.
Join the movement: tvalacarte.org
Why can’t I choose to pay for only the 10-15 channels I actually watch instead of being forced to pay for a top tier package (200+ channels)to get a “special” channel like Speed? Most channels are crap, but I have to subsidize them…??? Feels like these companies have taken a page out of the governments book.
Don’t want religious channels and mexican channels.
For those old enough to remember:
First came free TV, paid for by commericals.
Then the airwave ON BOX paid subscription service, WITHOUT commercials, as the incentive.
Next, paid susbscription service went cable, all channels/events, with just a touch of commercials.
Then cable started charging extra for decent movies and events.
Now CABLE is paid subscription, all decent viewing as pay to watch extra, with nothing but commercials on the generic (as in nothing current) channels.
Nothing like good old American corporation greed and political grafting to insure a cable monoploy in your city.
Then comes satellite, which is following Cable’s lead, only without the political grafting and can’t be viewed when it rains. Go figure.
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mini mr T says:
I wish they’d let us choose our cable line-up “a la carte”, where we could include the channels that we really watch, and not have to pay for the ones we never watch.
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When cable first came out, that’s exactly what they did.
Cable company quickly figured out they had a lot of crap on their hands and changed it all: grouping many ‘filler’ stations with the most popular channels in a ‘take it, or leave it’ stance…which continues to this day (in their best interests, of course).
Remember: this is about commerce.
The cable companies are in this to make a profit – they don’t really care if you like C-span, the outdoor channel, Oxygen or not. That’s simply irrelevant.
I don’t know why, but mini Mr.T sounds like a striaght-up genius to me. “A la carte” would be the way to go if these cable companies want to save what little customers they have left. This all takes me back to a basic argument I have with the entertainment industry. In light of the recent economic downtu…blah blah blah, is anyone even reading this? My wife sucks big black cock. And guess what? I don’t care. In fact, I like to watch. Can the cable companies give me that? Well tell me when and then maybe I’ll sign up.
Don’t get me started on cable TV… specifically Time Warner.
First of all, I thought monopolies were illegal? I guess not, since my ONLY OPTION is…Time Warner!
Because of that, they can offer crappy service and crappy customer service but guess what? I can’t go to anyone else, and I still want my cable, so it’s win-win for them.
I’ve had so many issues with TW I don’t even know where to begin… billing issues, rude overseas customer service agents, “upgrades” on my DVR that just make everything slower, less accurate, and a bigger pain than the original software.
And yes, the being forced to buy channels i NEVER watch doesn’t make me too happy either.
There needs to be another company in my area that TW will be forced to compete with.
I hate to pile on here, but being bombarded with crappy programming is the main issue for everyone. Shopping, religious and international channels dominate the dial to the benefit of very few niche consumers.
No one will allow a la carte pricing because all of that garbage would instantly disappear from the majority of televisions. That said, I dumped Cox a while back for DirecTV and will not be returning.
True. comcast and time warner probably won’t start providing a la carte… that would kill the golden goose. 25+ million people paying over $100 per month for programming they don’t watch.
But a small cable operator could provide the service. in conversations, they have revealed that only 1,000 people in a single neighborhood would be necessary to make this type of service available.
The challenge then is to aggregate demand. that’s why we’re gaining momentum at TVALaCarte.org.
Join us!
Any form of cable or satellite tv is a huge rip off! You are paying for tv programming that was intended to be free to the viewer by means of advertising. What a joke! So now you pay $50-100 for the privilege of watching tv plus 20 minutes of commercials per hour! The future of TV is subscription-commercial free IPTV via high speed internet. Watch what you want, when you want, without commercials. The change is coming!
Until they start throwing ads in the IPTV channels Cody
Ninjavideo.net has no commercials. It’s great to finish a show in 20 minutes vs 30min + comm’l.
My ATT uverse bill just grew by another $5.00. Don’t know why I have to pay extra when the channel lineup just gets worse. I have to admit uverse is cheaper compared to TWC. It’s those darn networks fault that is why we all have to pay more; they want more from the cable providers and the consumer gets to view those stupid snuggie commercials that comes on every five minutes.
i rather read a good book,, then look at mindless tv… or catch a good movie elsewhere.
I’ve dropped television altogether. Why would I pay to allow corporations to sell me crap I don’t need and can’t afford, particularly misinformed political views? Oh, I’m still getting plenty of commercial-free content… online, where I can fact-check what’s being said, and have a voice in the Commons. With television, they tell, you listen… you have no voice except the OFF switch.
One commentor said Satellite TV doesn’t work in the rain – WRONG! I recently lived in a part of the country where considerable rain occurs every few days for a good part of the year, it snows several days a year, and everyone lives with fear of tornados. Over a four year period I lost the TV signal about twice a year, for a period measured in minutes, not hours. In my experience, there is virtually no difference in satellite reliability in comparison to anything else. Cable companies compete using fear mongering that is unjust – and no, I don’t work for or own any satellite company, or their stock. Living in California for 30+ year, I’ve only had cable, but will soon switch to satellite due to cable company rates and declining service. Think about free over-the-air TV of 40 years ago. I think paying $1200+ a year now is not justified by added “value” in any pay TV service.
I currently don’t have cable, because to get the 2-3 channels I used to watch the most I would have to buy the top tier service. It’s a pain. At least I can catch some shows on Hulu.
It rubs me the wrong way that cable providers have exclusive franchises within the cities they operate in. There is no competition within that market for any other cable company.
If you want compeititon, which would keep prices low, then you have to switch to an entirely different technology…satellite. Apples and Oranges for pricing models.
If Cox and Time/Warner had to square off for the exact same customer, there’d be incentives for choosing one or another. Now, there isn’t any choice.
I also think that we should own our own set-top devices which can be programmed for only the channels we would ever want and which woulod travel with us if we relocate. Being able to migrate the technology would open things up considerably and would be much more price competitive.
Broadband access is still the sticking point though. Satellite can’t give you that, yet.
All I want is cheap broadband access and I’ll let technology catch up to give me the content I want.
HEY EDITOR! YOUR ADDS ARE COVERING YOUR ARTICLES!!!!!!
We need more bandwidth, Overseas their whole system has been beyond us for years.
We have better programing but it’s like our disaster response we sit on it for months until the victims are all dead! WE JUST CAN’T DELIVER!!!
What happened to high speed wireless service? basically they were going to install 100gb wireless routers to pick up a local signal? and the encrypted signal would go to your wireless router to any room.
No more cables or dishes. Just high speed net based programing.
Time Warner SUCKS! I would not use their service if it was free!
Cable companies need to start running fiber directly to homes.
Yes, I agree Time Warner Cable sucks and has very bad customer service. This company does not care about their customers. I have just cancelled my service with them.
I put up with Time Warner cable card limitations for two years and finally decided I’ve had enough. I want to stick with my HD TiVo box and the lousy TW cable cards don’t allow some programming that I subscribe to. Yes, they provided a switcher box that brought some HD channels into my TiVo, but some channels didn’t appear at times and expensive sports packages, like MLB Extra Innings, don’t work with cable cards. So, I can spend $180 for the baseball package and not get it on my HD TiVo. No thanks – I fled for DirecTV in anticipation of their new HD TiVo box.